Correlation Between DBT SA and Europlasma
Can any of the company-specific risk be diversified away by investing in both DBT SA and Europlasma at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining DBT SA and Europlasma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DBT SA and Europlasma SA, you can compare the effects of market volatilities on DBT SA and Europlasma and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in DBT SA with a short position of Europlasma. Check out your portfolio center. Please also check ongoing floating volatility patterns of DBT SA and Europlasma.
Diversification Opportunities for DBT SA and Europlasma
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DBT and Europlasma is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding DBT SA and Europlasma SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Europlasma SA and DBT SA is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on DBT SA are associated (or correlated) with Europlasma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Europlasma SA has no effect on the direction of DBT SA i.e., DBT SA and Europlasma go up and down completely randomly.
Pair Corralation between DBT SA and Europlasma
Assuming the 90 days trading horizon DBT SA is expected to generate 1209.34 times less return on investment than Europlasma. But when comparing it to its historical volatility, DBT SA is 4.74 times less risky than Europlasma. It trades about 0.0 of its potential returns per unit of risk. Europlasma SA is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 6.55 in Europlasma SA on September 2, 2024 and sell it today you would earn a total of 2.95 from holding Europlasma SA or generate 45.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DBT SA vs. Europlasma SA
Performance |
| Timeline |
| DBT SA |
| Europlasma SA |
DBT SA and Europlasma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DBT SA and Europlasma
The main advantage of trading using opposite DBT SA and Europlasma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DBT SA position performs unexpectedly, Europlasma can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Europlasma will offset losses from the drop in Europlasma's long position.The idea behind DBT SA and Europlasma SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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